MISTAKE 1: NOT LINK YOUR BANK TO XERO
Why?
You could miss the moment a customer pays, or worse, not even notice if they don’t pay, and you may run into cash problems using old data, rather than real-time updated information.
To do:
Imagine logging into an app every day that has pulled bank transactions from your online banking system. This means you can immediately match your bank’s incoming and outgoing payments to your customer invoices and any payments due to vendors such as accommodation costs, contractors, etc. Xero Touch works on IoS and Android and provides a real-time manual update of your business finances, which means you can be anywhere in the world and never be in the dark.
MISTAKE 2: NOT BILLING YOUR CUSTOMERS ON TIME
Why?
There’s nothing worse than getting the job done, getting sidetracked from the next job, and forgetting to bill for the first job. This can cause cash flow problems if it spreads to more and more jobs, but all too often we find that people are literally too busy with work to act.
To do:
1) For one-off projects, by agreeing on the initial fee for the job, create a quote in Xero that you can then convert to an invoice with the touch of a button when the job is complete; Y
2) For fixed or recurring jobs, subscription revenue creates a recurring invoice in Xero, which means that the invoice is issued every month until you tell it to stop. As an example, our bills go out on the 1st of every month while we sleep!
MISTAKE 3: NOT SENDING YOUR INVOICES TO THE RIGHT PERSON
Why?
If your clients are small businesses, this won’t be a big problem since the person you agree to do the work for will probably also pay the bills. Imagine, however, that you are dealing with much larger companies, with multiple sites, multiple departments, and running crazy bureaucratic processes. If you don’t send the invoice to the right person and department, it simply won’t get paid when you need it.
To do:
When the rate is agreed with your contact, get details about how the invoice will be paid, specifically finding out if the invoice needs a reference to your system (for example, a purchase order) and details of who the invoice should be sent to by email (never post). An invoice when it can be sent by email!). Then email the Xero invoice to your contact and the payment department and attach all supporting documents to the invoice when you send it.
MISTAKE 4: NOT FACILITATING THE PAYMENT OF THE INVOICE Why?
Your customers are busy people just like you. What would you do if you received an invoice without bank details? You’d involuntarily procrastinate and say, “I’ve got to check that out” without ever doing it, as a million other things come up.
To do:
Xero now allows you to insert a “pay now” link on your invoice. So when the email is received (see Mistake 3: Never send an email other than by email), the recipient can see the backup of the invoice and an extremely useful button that allows you to pay with literally a few clicks. Imagine getting paid within an hour or so of billing! We recommend that you set up a PayPal or Stripe account for credit card payments and GoCardless for bank transfers to offer as many options as possible.
